Leading indicators for your human resources (HR) function.

The majority of Chief Executive Officers (CEOs) understand the importance of HR.  CEOs expect their HR leaders and the HR function to achieve the basics well, but have little interest in the administrative, transactional, and compliance aspects of HR beyond the fact that they are done.

Research overwhelmingly finds that what CEOs want from HR, and what they care about most, is support in enabling the business strategy and building the people and organisational capability to achieve it.

The technical expertise of the HR leader is a given.  Strategic thinking, commercial understanding, and performance are the differentiators. HR Directors need to be more ‘Director’ and less ‘HR’.

And many CEOs privately admit that they don’t know how to use their HR team as effectively and strategically as they would like to.

Equally, that same group said that having the right data is vital – particularly HR metrics that contribute to commercial goals.

Some of the most important metrics and leading indicators that your HR team should provide are:

Hiring plan

Including targets for numbers, time to hire, cost to hire, agency fees, diversity rates, open positions filled internally, etc.

Exits/attrition

Including regrettable turnover percentage, exits within six months, exits within 24 months, attrition/retention percentage, leading termination reason, leading resignation reason, internal turnover, etc.

Manager effectiveness

Including data by manager for turnover, retention, engagement, performance reviews completed, etc.

Employee engagement

Including trends over time and qualitative feedback, employee net promoter scores, etc.

Absenteeism

Including short-term, long-term, lateness, etc.

Training effectiveness

Including training days/costs, course attendance and completion rates, post-training assessment rates, learner satisfaction and retention rates, and training return on investment.

Cost

Including total cost as a percentage of overall organisational expenditure, cost of the HR function per employee, the ratio of full time equivalent employees to HR staff.

This mix of leading and lagging indicators signals a wide span and range of critical areas that may need attention.  They will allow you to recognise patterns, identify strengths and weaknesses, predict future trends, and take action where required.

This is the real power of HR leading (and lagging) indicators.  They allow organisations, businesses, and HR leaders to proactively tackle problems identified by these signals.  This means they can prevent problems from escalating or even occurring in the first place.  Conversely, ignoring these early warning signs can lead to reduced employee satisfaction, increased turnover, lower productivity, and ultimately, a negative impact on the organisation’s bottom line.

If these data, and associated insights, are not readily available in your organisation then you must ask why.